Development

Commentary / Development / Economics / Law and Economics — No Comments
17
May 13

Spoken Like a True Development Economist

I remember there was this fascination with the idea of the informal economy about 10 years ago. Stewart Brand was talking about how brilliant it is that people get by in slums on an informal economy. He’s a friend so I don’t want to rag on him too much. But he was talking about how wonderful it is to live in an informal economy and how beautiful trust is and all that.

And you know, that’s all kind of true when you’re young and if you’re not sick, but if you look at the infant mortality rate and the life expectancy and the education of the people who live in those slums, you really see what the benefit of the formal economy is if you’re a person in the West, in the developed world. And then meanwhile this loss, or this shift in the line from what’s formal to what’s informal, doesn’t mean that we’re abandoning what’s formal. I mean, if it was uniform, and we were all entering a socialist utopia or something, that would be one thing, but the formal benefits are accruing at this fantastic rate, at this global record rate to the people who own the biggest computer that’s connecting all the people.

So Kodak had 140,000 really good middle-class employees, and Instagram has 13 employees, period.

That’s computer scientist Jaron Lanier, who coined the term “virtual reality,” explaining his view that the Internet has destroyed the middle class, in an article on Slate.

Though I’m not sure that the argument that “great stagnation” arguments of the type made by Lanier, which posit that technological change brings increased unemployment, hold much water (thousands of years of technological change seem to indicate otherwise), Lanier’s comment about informal economies is spot on.

Development economists and law-and-economics scholars know the serious inefficiencies that go hand-in-hand with informal economies all too well. Here is one of my favorite articles on those so-called flea-market economies, by Fafchamps and Minten. Here is a whole book by Marcel Fafchamps about the difficulties posed by trying to conduct business in an environment characterized by informality.

Africa / Agriculture / Development / Economics / Land / Law and Economics / Policy — 2 Comments
15
May 13

Yes to Land Rights, but Land Titles Are No Silver Bullet

Some economists argue that ensuring people have titles to their land can ensure a feeling of security and boost production. … The greatest proponent of the argument is Hernando de Soto, a development economist who has managed to win praise from the likes of Bill Clinton and the libertarian Cato Institute.

There is plenty of evidence that land rights are connected to productivity, but new research out of Madagascar shows that it is not always the case.

Duke University researcher Marc F. Bellemare tested whether the land rights component of a $100 million Millennium Challenge Corporation (MCC) compact with the government of Madagascar. He found that the provision of formal land rights, meaning land titles, had not measurable impact on productivity when comparing farmers that did and did not benefit from the MCC compact.

Holding a land title is not sufficient if structures are not in place to enforce land ownership and dole it out.

From a very nice article by Tom Murphy on Humanosphere, which discusses the policy implications of my forthcoming Land Economics article on land rights in Madagascar. Continue reading →

Agriculture / Development / Economics / Famine / Food / Foreign Policy / Policy / Politics — No Comments
14
May 13

Getting Food Aid Right

How many of us read a story of disaster striking people half a world away and respond by getting out our checkbooks?  Tens of millions of us in any given year, and Americans are especially generous. Relief agencies received more than $1.2 billion in the wake of the disastrous 2010 earthquake in Haiti and $3.9 billion following the 2004 Indian Ocean tsunami.  But is anyone foolish enough to go to the local grocery store, buy food and ship it to communities devastated by disaster? Of course not. That would cost much more, take too long to reach people in need, risk spoilage in transit, and likely not provide what is most needed.

Yet with only minor oversimplification, this is precisely what our government’s food aid programs have done since 1954. Our main international food aid programs are authorized through the Farm Bill and must purchase food in, and ship it from, the United States. This system was originally designed to dispose of surpluses the government acquired under farm price support programs that ended decades ago.  These antiquated rules continue today thanks to political inertia in Washington.

As a result, only 40 cents of each taxpayer dollar spent on international food aid actually buys the commodities hungry people eat; the rest goes to shipping and administrative costs. And the median time to deliver emergency food aid is nearly five months. We can do better.

From a longer piece by my friend and frequent coauthor Chris Barrett on CNN’s Global Public Square blog. Chris is also the author with Dan Maxwell of what is without a doubt the best book anyone can read on food aid.

Africa / Celebrities in Africa / Development / Economics / Impact Evaluation / Miscellaneous / Poverty — 1 Comment
01
May 13

Does International Child Sponsorship Work?

We have all seen the commercials on television. Many of them readily fall under the broad name of “poverty porn,” and most of them feature resigned-looking developing-world children set against a sad soundtrack. All of them ask us to help by sponsoring a child in a developing country.

YouTube Preview Image

But does international child sponsorship work? In a new article (older, ungated copy here) in the Journal of Political Economy, Bruce Wydick, Paul Glewwe, and Laine Rutledge give an answer that is bound to surprise many development cynics:

Child sponsorship is a leading form of direct aid from wealthy country households to children in developing countries. Over 9 million children are supported through international sponsorship organizations. Using data from six countries, we estimate impacts on several outcomes from sponsorship through Compassion International, a leading child sponsorship organization. To identify program effects, we utilize an age-eligibility rule implemented when programs began in new villages. We find large, statistically significant impacts on years of schooling; primary, secondary, and tertiary school completion; and the probability and quality of employment. Early evidence suggests that these impacts are due, in part, to increases in children’s aspirations.

Agriculture / Development / Economics / Food / Foreign Policy / Policy — Comments Off
30
Apr 13

Reform Food Aid

From an editorial in last Sunday’s New York Times:

Food aid is one of the most important tools of American foreign policy. Since the mid-1950s, the United States has spent nearly $2 billion annually to feed the world’s poor, saving millions of lives. But the process is so rigid and outdated that many more people who could be helped still go hungry. Reforms proposed by President Obama will go a long way toward fixing that problem and should be promptly enacted by Congress. Continue reading →

← Older Entries